Three More Medicare Enrollment Situations Requiring Special Handling

Sometimes the Medicare rules are just plain unfair, especially to people who have paid in the most. Consider this situation:

4. You miss your special enrollment period.

Raymond worked at his hardware store until he was 88 years old. All the years he had been in business, he had maintained health insurance for himself, his wife, and his employees, but when it finally came time to sell his store, he needed to sign up for Medicare Part B. Unfortunately, Raymond got some bad advice.

A Social Security employee told Raymond that he could sign up for Medicare during the annual general enrollment period that comes around every year between January 1 and March 31. Unfortunately, he sold his business on April 1, which started the clock ticking on his special enrollment period--when he could avoid paying a 230%(10% x 23 years) penalty on his premiums that only lasted eight months, until December 1. Even worse, Raymond only sold the business because he needed his hip replaced.

What could Raymond do?

In this case, the only way for Raymond to get any coverage at all for the fifteen months between his sale of the business on April 1 in one year and the beginning of his Medicare coverage on July 1 the next year was to take COBRA on his store's policy--and that required the cooperation of the new owners. Getting bad advice from a Medicare representative didn't entitle him to faster coverage.

5. You "cash in" your sick leave and vacation time when you retire.

Many employers allow retiring employees to take their accumulated sick leave or vacation time when they retire. They either continue on the payroll for some weeks or months after they stop working, or they get a lump-sum payment for their accumulated leave. The way you take your leave pay when you retire makes a big difference in what you need to do for Medicare.

If you effectively retire from your job but continue to get a paycheck while your leave time is being used up, and you continue to be carried on your employer's insurance, you may qualify for a special enrollment period for Medicare Part B. Don't rely on your pay stub, however. Get a statement in writing that you are continuing to be covered by your employer's insurance while you are getting leave pay.

If you get lump sum payment for your leave time, then you don't get an added grace period for enrolling in Part B. In this case, you need to sign up for your plan in the eight months after you retire or in the three months before your 65th birthday, whichever comes sooner.

6. You need Medicare and you need it right now.

Many Americans approach age 65 with little or nothing in the way of assets, earning too much for public assistance programs or sliding-scale or "free" clinics, but not enough to pay the $1000 to $4000 a month health insurance can cost with pre-existing conditions. Some people become desperate for care they simply cannot afford.

It's not much of a head start, but the Medicare rules allow for coverage starting on the first day of the month in which you turn 65, provided you sign up as soon as you are eligible. If you were born on April 29, 1948, for example, you can get coverage on April 1, 2013, for a few days to a few weeks while you are still 64, if you sign up right now.